House plays hookey in conference

Delegates skip meeting to protest what some see as inflexible Senate position

Posted: Thursday, June 08, 2006

Two Alaska senators sat idly for 40 minutes in front of live cameras during a Wednesday night conference committee, then shrugged their shoulders and recessed the meeting.

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The House never showed up.

A conference committee with members of the Alaska House and Senate had been scheduled on Wednesday to find middle ground on two versions of an oil tax bill. But House delegates skipped the meeting to protest what some saw as an inflexible Senate position.

The two bodies have spent the greater part of the last three months rejecting drafts sent by the other chamber and rewriting the bill in their own committees. At high oil prices, the plan to tax companies' net Alaska profits stands to earn $2 billion more than the current tax scheme.

As today is the last day of the special session that was called May 10, lawmakers have until midnight to approve the bill before it dies.

Judging by the way the conference committee was handled, some lawmakers are uncertain if they can beat the deadline.

"I don't know," said Rep. Beth Kerttula, D-Juneau, one of the appointed members on the House negotiation team. "It's going to be real close."

The hardest part to agree on is the tax rate, with the Senate insisting on 22.5 percent and the House recently approving a rate of 23.5 percent. Both include a sliding scale that increases the rate starting at $50 a barrel, but the House's escalator earns more than the Senate's.

Both versions are more progressive than the governor's proposal of 20 percent. Senators say they want to be careful not to raise taxes so high that oil producers stop looking for more wells, while the House is siding with hired consultants who said the oil companies could afford a rate of 25 percent or more.

House Majority Leader John Coghill, R-North Pole, said the Senate asked the House to accept a package that contained only the Senate's numbers.

"There's room for movement," he said. "But it doesn't work if only one side is doing the moving."

Senate President Gary Stevens, R-Kodiak, told The Associated Press that the Senate's tax rate was non-negotiable.

Conference committee Chairman Sen. Bert Stedman, R-Sitka, denied that that was the Senate's position.

"There's no truth to that at all," he said. "I'm here to negotiate and try to come to a compromise on this bill. And I'm willing to do it at any time, and the sooner the better."

When asked if the committee was at an impasse or stalemate, Stedman said he wouldn't know until tonight.

Kerttula said not showing up to the meeting was her team's way of negotiating.

"I trust the team. This was the decision and I believe it was the right one," she said.

Kerttula added that the House is still running on momentum from Tuesday night, when it passed its latest version with a 29-9 vote, its largest majority yet.

The conference committee was scheduled to reconvene at 9 a.m.

Lawmakers also are waiting for the governor to make a decision on calling a second special session. In addition to the oil tax, the Legislature is reviewing a handful of amendments to the Stranded Gas Development Act.

If another special session is called, lawmakers can revisit the net-profits tax, though they would have to draft new bills.

Gov. Frank Murkowski wants to link the oil tax to a contract the state is negotiating with three major oil producers to build a $19 billion-$27 billion natural gas pipeline. The contract also calls for locking in the rates for 30 years on oil and 45 years on gas. The tax freeze would allow producers to predict their finances and determine if they can afford the pipeline and other future North Slope investments.

Murkowski on Wednesday wrote a letter to the Legislature blasting the House for passing a 23.5 percent tax rate Tuesday, and pleaded again for both bodies to consider a lower rate for the petroleum production tax (PPT).

"This is a situation in which more is less," Murkowski wrote.

Angus Walker, a vice president at BP Alaska, also sent the conference committee a letter expressing his disappointment.

"On behalf of Alaska's biggest investor, I have personally followed PPT from the beginning. It would be remiss of me not to declare my frustration and dismay with where we are today," Walker wrote.



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